Why M&A Activity Is A Good Sign
September 28, 2009 by Tisa Silver
Filed under Finance
According to Reuters, between June and August, global M&A activity rose 29 percent versus the previous three months.
Investors love it, but why is this a good sign?
Photo by A.www.viajar24h.com, courtesy of flickr
The short story is that companies are comfortable enough to spend cash again.
M&A activity reached its peak in spring of 2007, and once the credit crunch began, corporate purse strings were tightened (at least for mergers and acquisitions).
Several high profile deals have been announced in the past month, here are a few:
Dell Computer (DELL) and Perot Systems (PER) - $3.9 billion
Adobe Systems (ADBE) and Omniture – $1.8 billion
Xerox (XRX) and Affiliated Computer Services (ACS) – $6.4 billion
Disney (DIS) and Marvel (MVL) – $4 billion
As of mid-month, M&A activity for 2009 totalled about $1.3 trillion. It’s on the rise, but relatively speaking it is still low, coming in just below one-third of the total from 2007.
Now that borrowing costs are down and cash is flowing more freely, things appear to be looking up. Global stock markets have risen along with M&A activity, but remember: credit markets pull the strings!
